Ethernet Switch and Router Trackers Show Steady Growth

According to IDC the worldwide Ethernet switch market recorded $5.66 billion in revenue in the first quarter of 2017 (1Q17), an increase of 3.3% year over year. Meanwhile, the worldwide total enterprise and service provider (SP) router market recorded $3.35 billion in revenue in 1Q17, decreasing 3.7% on a year-over-year basis.

From a geographic perspective, the 1Q17 Ethernet switch market once again recorded its strongest growth in the Middle East and Africa (MEA) region, which increased a solid 9.1% year over year. At the country level, the United Arab Emirates (up 38.2% year over year) and South Africa (up 25.6% year over year) were among the standouts. Western Europe also saw strong growth, increasing 6.0% year over year in 1Q17, with Belgium (up 27.6% year over year) and Sweden (up 12.0% year over year) as growth pacesetters.

Asia/Pacific (excluding Japan)(APeJ) grew at a rate just above the overall market with a 3.5% year-over-year increase in 1Q17. New Zealand (up 20.5% year overyear) was the regional growth leader in 1Q17. North America grew at a below-market rate in 1Q17, increasing 2.5% on a year-over-year basis, with Canada increasing at a stronger 4.5%.

Latin America experienced flat-to-declining performance in 1Q17, with a 0.4% contraction year-over-year. Argentina was a bright spot in the quarter, growing 57.4% on an annualized basis. Japan, in a reversal from the previous quarter, declined 0.6%. Central and Eastern Europe saw the steepest decline of 1Q17, contracting 2.4% year-over-year, as declines in Poland (down 30.4% year-over-year) and Czech Republic (down 29.2%) weighed on the region.

10Gb Ethernet switch revenue decreased 1.6% year over year in 1Q17, coming in at $1.98 billion, while 10Gb Ethernet switch port shipments grew 23.9% year over year with over 10.7 million ports shipped in 1Q17. 40Gb Ethernet revenue came in at $609.5 million in 1Q17, declining 7.2% over 1Q16, while port shipments fell just below 1.3 million, representing a decrease of 21.9% year over year.

10Gb and 40Gb Ethernet are now joined by emerging 100Gb Ethernet (revenue up 323.5% and shipments up 776.4% on annualized basis in 1Q17) to be the primary drivers of the overall Ethernet switch market. 1Gb Ethernet switch revenue decreased 0.5% year over year in 1Q17, despite a 11.0% increase in port shipments in the same period, pointing to a maturing campus segment.

The worldwide enterprise and service provider router market contacted 3.7% on a year-over-year basis in 1Q17 based on a 4.4% decrease in the larger service provider segment and a 1.4% decrease in enterprise routing. This will be a market to watch closely over the coming quarters as software-defined architectures start to take hold across the WAN, with the potential for SD-WAN to disrupt traditional routing architectures and WAN transport services markets especially at the network edge.

The combined enterprise and service provider router market saw a varied regional performance in 1Q17, with APeJ recording the strongest growth (up 8.8% year over year). Japan, the only other region to record growth, increased 5.2% year over year in 1Q17. MEA was down 1.0%, while CEE declined 4.1% over the period. Other regions saw greater declines in 1Q17. Western Europe was down 7.1% on annualized basis, while North America contracted 9.8%. Latin America saw the steepest decline of all, decreasing 23.4% over 1Q16.

Cisco finished 1Q17 with a year-over-year decline of 3.5% in the Ethernet switching market and market share of 55.1%, down from its 55.6% share in 4Q16 and down from 59.0% in 1Q16. In the vigorously contested 10GbE segment, Cisco held 52.4% of the market in 1Q17, down from 53.0% in the previous quarter. Cisco saw its combined service provider and enterprise router revenue decrease 13.3% on an annualized basis, while its market share came in at 43.9% in 1Q17, up from 42.2% in 4Q16, but down from 48.8% in 1Q16.

Huawei continued to perform well in both the Ethernet switch and the router markets on an annualized basis. Huawei's Ethernet switch revenue grew 69.8% year over year in 1Q17 for a market share of 6.3%, down from 9.9% in 4Q16 and up from 3.9% in 1Q16. Huawei's enterprise and SP router revenue increased 17.0% over the same period, to finish with 19.8% of the total router market in 1Q17 compared to 18.8% in 4Q16 and 16.3% in 1Q16.

Hewlett Packard Enterprise's (HPE) Ethernet switch revenue grew 0.8% sequentially in 1Q17 and its market share stands at 6.0% in 1Q17, up from its 5.0% share in 4Q16. (Note: HPE and H3C are tracked separately as of 2Q16).

Arista Networks performed well in 1Q17, with its Ethernet switching revenue rising 37.1% year over year and earning a market share of 5.1%, up from 3.9% in 1Q16. Arista's market share in the 100Gb segment stands at 27.8%.

Juniper's Ethernet switching increased by a notable 39.2% year over year in 1Q17, bringing its market share to 4.3% versus 3.2% in 1Q16. Juniper also saw a 3.4% year-over-year increase in combined service provider and enterprise router revenues, with market share of 15.6%, compared to 14.5% in 1Q16.